US Economy: The Obama Factor

Barack ObamaThe overall U.S. trade deficit shrank by 5.68 percent in March 2008, falling to $58.21 billion from the adjusted February 2008 level of $61.71 billion. Exports fell by 1.71 percent, to $148.51 billion, for the first time since January 2007. Imports dropped by 2.86 percent, to $206.72 billion. The fall-offs were especially sharp in goods trade – where exports sank by 2.37 percent, to $104.73 billion, and imports declined by 3.36 percent, to $173.34 billion.

The prediction markets forecast a Obama presidency in 2009. The most important and most immediate impact of a potential Obama win would be in the area of foreign policy. The Bush doctrine increased the price of a barrel of crude oil. The troubled U.S. relationship with oil-producing nations Venezuela, Russia and Iran in particular added atleast $20-$30 premium in the per barrel oil price. Lower oil prices and the consequent moderate increase in energy demand domestically, could help reverse another long-term trend: the weaker dollar. U.S. energy imports are running 30-40% of total imports. If the U.S. imports less oil or pays less for the oil that it does import, the trade deficit will improve, increasing the demand for dollars.

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